9/23/2008 9:07 PM Pacific Looking at the daily NAZ e-mini, we are at the last line in the sand, and prospects for the after hours rally to stick (this time) are looking good to me. The first thing I want to draw your attention to is the RSI. Notice its most recent activity. It came from oversold (30), tested the oversold line then turned back up. This is a good indicator when combined with a strong price move, which we have. Notice that the same thing occurred when price started to come down from the 1977 high. Here is something I think is way more interesting. In the case at the top, 1 is where it comes down from overbought (70) and 2 is where it tests the overbought line. Now look at the most recent reading, 1 takes us above oversold, the current label 2 tests the oversold line and bounces. Note that the current wave labeled 2 stopped exactly at an .810 retracement of wave1. The most common retracement for a 2 nd wave is .618 to .810. Note that wave 2 at the top was .618 of wave 1.
Transcript
9/23/2008 9:07 PM Pacific
Looking at the daily NAZ e-mini, we are at the last line in the sand, and prospects for the after hours rally to stick (this time) are looking good to me. The first thing I want to draw your attention to is the RSI. Notice its most recent activity. It came from oversold (30), tested the oversold line then turned back up. This is a good indicator when combined with a strong price move, which we have. Notice that the same thing occurred when price started to come down from the 1977 high. Here is something I think is way more interesting. In the case at the top, 1 is where it comes down from overbought (70) and 2 is where it tests the overbought line. Now look at the most recent reading, 1 takes us above oversold, the current label 2 tests the oversold line and bounces. Note that the current wave labeled 2 stopped exactly at an .810 retracement of wave1. The most common retracement for a 2nd wave is .618 to .810. Note that wave 2 at the top was .618 of wave 1.
9/23/2008 9:07 PM Pacific
Let’s look at the 60min S&P E-minis to get a breakdown of the wave structure. Since my bias is STILL 5 waves up with a 3 wave retracement in progress, that is the labeling. I believe we are now in the early stages of another 5 waves up. The obvious way to be wrong is to take out 118275. Technically a second wave can retrace up to 99%, but my bias will change if we go down any more at all. We should be finished going down for now.
In case I am wrong, here is the back up plan. If 118275 is taken out, I will immediately go short and target 114088 based on the alternate count of the chart below. I won’t think twice. I always have a preferred count, but I am never married to it. The count below is ugly, but it is technically ok. Just so you know, when I set a target, I trade in the direction of that target. I rarely, take a position and ride it out. I’ve tried that; the draw downs can kill you. Going back to the first chart, the daily chart of he Nazz, I have placed a red horizontal line on the upside target, a Fibonacci confluence of the .618 retracement level down from 1977 and a 1:1 Fibonacci extension of the 5 waves up from 1611. I will follow up tomorrow with short term targets along the path for both the Nazz and S&P. Either way.
9/23/2008 9:07 PM Pacific
TMD/DW The market detective provides personal market opinion based on sound technical analysis and research. However, no warranty is given or implied as to its true reliability. The market detective will make errors and mistakes. The market detective is not an investment adviser and is not making recommendations to buy, sell, or place orders relating to the futures contracts, ETFs, or stocks that he writes about. The responsibility for decisions made from information contained in this service are solely that of the individual subscriber. The individual must fully research and make his/her own decisions before acting on any information provided by the market detective. The market detective assumes no responsibility for subscriber investment or trading results.
